ANI |
Updated: Aug 12, 2022 10:22 am IS
Geneva [Switzerland]Aug 12 (ANI): More than seven percent of Indians owned digital currency in the form of cryptocurrency in 2021, according to the United Nations Trade and Development Organization UNCTAD, which said the use of cryptocurrencies is increasing worldwide, including developing countries has grown exponentially during the COVID-19 pandemic.
The UN body released data on the share of the population in the 20 largest economies owning digital currencies in 2021. Ukraine topped the list with 12.7 percent of its population owning such currencies.
India found itself in seventh place.
While these private digital currencies have rewarded some and made remittances easier, they are an unstable financial asset that can also pose social risks and costs, the UN agency said.
The agency recently examined the reasons behind the rapid adoption of cryptocurrencies in developing countries, including facilitating remittances among others.
While cryptocurrencies can facilitate remittances, they can also enable tax evasion and avoidance through illicit flows, as if going to a tax haven where ownership is not easily identifiable.
“Recent digital currency shocks in the market suggest that holding crypto poses privacy risks, but when the central bank steps in to protect financial stability, the issue becomes public,” it said.
It is important to note that Bitcoin’s price has fallen sharply from its all-time high over the past few months, impoverishing investors. Most of the other prominent crypto assets have also seen stronger declines recently.
Should cryptocurrencies become a widespread means of payment and even unofficially replace domestic currencies, this would endanger the monetary sovereignty of the countries.
“Stablecoins pose particular risks in developing countries with unmet demand for reserve currencies. For some of these reasons, the International Monetary Fund has expressed the view that cryptocurrencies as legal tender pose risks.”
With this in mind, the UN body called on the relevant authorities to ensure comprehensive financial regulation of cryptocurrencies by regulating crypto exchanges, digital wallets and decentralized finance, and banning regulated financial institutions from holding cryptocurrencies.
She also called for restrictions on cryptocurrency-related advertising, an agreement to implement global tax coordination on cryptocurrency taxes, regulation and information sharing.
Crypto trading is gaining relevance as various financial institutions and central banks have also raised concerns about the financial risks involved in trading virtual currencies, including cryptocurrency. This form of currency can potentially be used for various anti-social activities.
Reserve Bank of India Governor Shaktikanta Das recently said that cryptocurrencies pose a clear danger and anything that derives value on a sham basis with no underlying value is just speculation under a fancy name.
The nature and scale of crypto markets are evolving rapidly and if current trends continue, they will pose risks to financial stability, the European Central Bank had previously stated.
The Financial Stability Board, an international body that oversees and makes recommendations on the global financial system, will report to G20 finance ministers and central bank governors in October on regulatory and oversight aspects of stablecoins and other cryptoassets. She works to ensure that crypto assets are subject to strict regulation and oversight.
“Crypto assets, including so-called stablecoins, are evolving rapidly. The recent turmoil in crypto asset markets highlights their intrinsic volatility, structural vulnerabilities and the issue of their increasing interdependence with the traditional financial system,” the Financial Stability Board had said. (ANI)
